"Health Insurance Rates Looking Scary? Don't Worry, Talk to Larry"
Health Saving Accounts (HSAs) were first introduced in 2003 so that people in high-deductible health insurance plans could get tax-free cash for medical expenses. Generally, a person who’s covered by a high-deductible healthcare plan may establish an HSA. A Health Savings Account (HSA) is designed to help you greatly reduce expenses on healthcare costs. Your contributions and withdrawals are all tax-free when used for eligible healthcare related cost. It’s a triple tax-savings possibility that may put more income in your pocket.
There aren’t many accounts where you are able to make tax-free deposits and withdrawals that are tax-free and enjoy tax-free growth. Make use of your HSA to help maximize your potential to save lots of money for the future. Once you have a minimal balance (typically $1,000) in your HSA, most HSA accounts will allow you to buy investments in your account. There are usually a number of mutual funds to pick from. You will also find that some banks will not have trading or transfer fees with no minimum investment quantity on these accounts. To sign up in a HSA, you need to be enrolled in a high-deductible health plan (HDHP). Because these plans do not cover expenses (other than an annual check-up) until the deductible is met, people who tend to enjoy a doctor co-pay payment for physician visits prior to meeting their deductible may not like having to pay the full negotiated rate for these services.
In addition, you cannot have:
• Other coverages that pay for out-of-pocket health care expenses before meeting your plan deductible
• A general-purpose flex care spending account (FSA) or health reimbursement account (HRA) for the exact same year (neither can your other half)
• Medicare or TRICARE
• Veterans Affairs (VA) plans which were used within the prior 3 months (in some cases this is allowed)
• Dependent status on someone else’s tax return.
Things to Keep in Mind:
• View the IRS contribution restrictions for the current year and an inventory of common expense on the IRS ( website.
• Yearly contribution limits consist of contributions made by both both employer and the individual (if applicable).
• You could make a one-time, tax-free transfer from an IRA. This amount counts toward your HSA contribution limit for the year.
• If you’re age 55 or older, you are able to add up to another $1,000 annually.
• If you are going to use your HSA for ineligible costs, you’ll need to cover taxes and a 20 percent penalty income tax on that amount. Note: If you’re age 65 or older or disabled during the time of the withdrawal, you won’t need to worry about the penalty income tax. Nonetheless, you’re accountable for paying income taxes.
• Save your itemized statements, detailed receipts and any Explanation of Benefits statements for all expense records.
You may have heard of HMA’s or seen an HMA being offered online and possibly thought is was just another type of Health Savings Account option you can use with your high deductible health plan. While it is true you can have an HMA and a high deductible health policy, the fact is you can have any type of policy with a HMA. Also, it’s not really a savings account either.
HMA`s allow account holders to contribute a specific dollar amount into an account every month to reach a target balance. So you may have a target balance of $5,000 and in order to reach that balance you’ll be asked to contribute $80 a month. If you don’t touch your account sometime around 35 months you’ll have reached your target balance of $5,000 even though your contributions only equal up to less than half that amount. That’s a HMA and it could change how you buy and pay for your health insurance.
Unlike an HSA, HMA’s are not tax deductible. They are however a great way to increase your medical expense purchasing power. However, as mentioned above the balance in the account increases more and more depending on how long you keep funds in your account without spending. This allows the insured to choose a higher deductible health plan cutting down on the overall cost of their insurance premiums. Funds can be used for elective surgeries, dental, vision, prescription, and other healthcare costs. The HMA participant receives a Visa card that can be used at the point of sale for them and their family. Only in limited situations does a claim need to be filed for payment. In most cases, the only thing required for payment is the swipe of a card.
If you have a HSA eligible high deductible health plan you have the right to open one of the Health Saving Accounts below. HSA accounts are for those that have high deductible Health Savings account insurance policies. The funds that go into the HSA account (up to yearly limits) are tax free. Funds in the accounts grow tax free and are spent tax free on eligible medical expenses. When choosing an HSA account it’s important to determine ease of use of the account, including how funds can be added and spent.
These HSA accounts feature debit cards for easy access and direct transfer from personal accounts to HSA fund account. For those who expect to have large balances over time it’s also important to have investment options available for account funds. These banks also give customers access to investment options such as mutual funds and bonds. Funds can be added to an HSA account as long as a HSA eligible policy is active. Funds can be spent even after terminating a HSA eligible policy.
Below you will find a few links with to some of my favorite Health Savings Account options. You don’t have to use one of these though, these are just a few that I like. When me and my wife had a HSA, before she passed, we had HSA Bank. Most of the banks I recommend do this, but what I loved about HSA Bank is that you could transfer money in real time just before you were going to spend it on a healthcare purchase. So there’s very little need for me to plan. If I’m picking up a medication, I transfer the cost of it from my checking account to my HSA in a matter of seconds using my computer or smartphone.
Now if you just want to contribute the max amount every year and be done with it, that’s fine too. But if you’re on a fixed income and you want to take advantage of the tax savings and subsidy dollars without holding up anymore of your money than you need to at this moment, this is how you do it:
At the end of the year you’ll get a form in the mail showing how much you “put in“ your HSA that year. Not only will you not pay taxes on that money, but that reduced income could also qualify you for more tax subsidy dollars if you have an ACA health plan (aka…Marketplace, healthcare.gov, Obamacare). So any additional amount you’re owed in addition to money you already paid taxes on, you’re getting back. It can make for a pretty decent tax return.
Insurance for your pet is something relatively new. While a lot like health insurance it is actually a type of property/casualty insurance. Plans can be purchased that cover only major events as well as plans that cover routine checkups and medications. These are three of the best pet insurance carriers on the market today and each has a wide variety of coverage options.
